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As CEO of OceanSide Marine, Rita Greenwood knows it is important to control costs and to respond quickly to changes in the highly competitive
As CEO of OceanSide Marine, Rita Greenwood knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When IDG Consulting proposes that OceanSide Marine invest in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant. A month later, management accountant Miles Cole reports that the team and IDG estimate that if OceanSide Marine implements the ERP system, it will incur the following costs: (Click the icon to view OceanSide's anticipated project costs.) The team estimates that the ERP system should provide several benefits: (Click the icon to view OceanSides anticipated project benefits.) Read the requirements. Requirement 1. If the ERP installation succeeds, what is the dollar amount of the benefits? If the ERP installation succeeds, the dollar amount of the benefits is Requirement 2. Should OceanSide Marine install the ERP system? Why or why not? Show your calculations. Complete the table below to calculate the expected net benefits (costs) of the project. (Use parentheses or a minus sign for net costs.) Expected benefits Expected costs Net benefits (costs) Costs of the Project a. $435,000 in software costs b. $89,000 to customize the ERP software and load OceanSide's data into the new ERP system c. $112,000 for employee training Benefits of the Project a. More efficient order processing should lead to savings of $190,000. b. Streamlining the manufacturing process so that it maps into the ERP system will create savings of $280,000. c. Integrating purchasing, production, marketing, and distribution into a single system will allow OceanSide Marine t reduce inventories, saving $210,000. d. Higher customer satisfaction should increase sales, which, in turn, should increase profits by $160,000.
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